Norway oil firms boost exploration budgets, limit overall investment

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OSLO (Reuters) - Norwegian oil and gas exploration will continue to rebound amid higher crude prices, a survey by the national statistics agency (SSB) showed on Monday, although the overall pace of investment by the industry was slower than most analysts had expected.

While exploration for new resources and in field development plans is expected to rise significantly this year and next, the investments at fields that are already in operation will decline, according to the closely watched quarterly report.

Investment in exploration and concept studies, a key indicator of spending on anything from drilling rigs to seismic data, was forecast to rise to 33.3 billion crowns in 2019 from 25 billion in 2018.

Overall 2018 investment plans were cut by some 2.1 percent since February, and are now seen amounting to 156.5 billion Norwegian crowns ($19.23 billion), an increase of 1.4 percent over 2017.

While initial forecasts for 2019 also point to near-flat spending, oil firms are expected to present more plans ahead, which will likely lift spending.

“If the schedules for these plans are realized, the accumulated investment costs in 2019 from these projects will increase the investments in field development even more, compared to the present estimate,” SSB wrote.

Economists said the decline in 2018 forecasts was a surprise, but maintained forecasts for a central bank rate hike to come later this year.

“It’s a bit weaker than expected,” said SEB economist Erica Blomgren, while adding that one-of factors were partly to blame and that upward revisions were likely to follow.

Nordea Markets also said the main numbers were on the weak side of expectations.

“Our interpretation is that the underlying pace remains good however. We expect strong oil prices and a further rise in investments,” said Chief Economist Kjetil Olsen.

It was SSB’s first release of companies’ forecasts for 2019 and the fifth prediction for 2018.